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To: djane who wrote (50299)	7/23/1998 3:47:00 AM
From: djane	Read Replies (2) \| Respond to of 61433

LU coming after COMS in retail modem market research.instat.com Lucent Jumps over the Edge Campaign" "The Lucent Jumps over the Edge Campaign" Lucent has decided to join Rockwell in taking on 3Com head to head in the retail modem market. Lucent will be partnering with retail modem vendors which will brand modems slated for the retail channel with a new logo displaying the words, "The Lucent Edge." Lucent's announced partners so far include Hayes, Multi-Tech and ActionTec. No details where released about the financial scope of the campaign, or if it would also eventually encompass the PC OEM market. When looking at this marketing campaign in relation to the 56k marketing debacle, is Lucent throwing good money after bad by trying to further differentiate 56k modems? Already, 56k modems on the retail shelves have a layer of sticker logos on them, starting with either x2 or 56kFlex, then a software upgradeable sticker, and finally a new v.90 sticker. Put on top of that a Lucent Edge logo, and consumers have a modem covered in a collage of marketing hoopla, when all they want is a modem that they can plug in and actually have run at data rates higher than 33.6k. Putting aside the bitterness of the marketing mess that modem and chipset vendors made of 56k, the Lucent marketing campaign does represent a serious effort on the part of Lucent to take a chunk out of Rockwell and 3Com's dominance in the retail space. Lucent has been very strong in the PC OEM segment of the modem market, also the fastest growing segment of the modem market. This marketing effort is designed to make consumers and retailers aware that Lucent silicon inside guarantees a higher level of quality and reliability. The campaign looks very much like the hugely successful (and expensive) "Intel Inside" marketing barrage that left us all with Intel inside stickers on our PCs. The difference is modem consumers quantify quality and reliability in terms of connection rates. By making guarantees of quality and reliability, Lucent puts itself in a position where its guarantee encompasses areas not under its' control. For example, the modem vendor has flexibility in terms how they build upon Lucent chipsets, and there is no way for Lucent to control what the customer is connecting to at the other end. If it is a Rockwell-based Access Concentrator or a 3Com Concentrator, the end-users' modem may perform below what was guaranteed or expected by the consumer. So much for the Lucent Edge logo. So, why would modem manufacturers decide to sign on to the Lucent campaign? Long-time Lucent collaborators may see this as an opportunity to share the marketing muscle of a well-known company with deep pockets. For Multi-Tech, the benefit is clear. Multi-Tech is using the Lucent branding campaign to jump-start its entry into the retail modem market. With no retail brand recognition to start with, any help is a plus, and Lucent's help is a major asset. But what about Hayes? A long-standing competitor in the retail modem space, what does Hayes stand to gain from Lucent's Edge campaign? Hayes has been struggling to keep up with modem competitors in the retail space, and has yet to make a dent in the PC OEM market. Hayes may see the Lucent Edge logo as a way to join forces. You know, safety in numbers. Hayes may also be interested in strengthening its relationship with Lucent in an effort to make inroads in the PC OEM business, where Lucent is very strong. Best case scenario, the Lucent Edge campaign allows Lucent to raise its profile among retail consumers, develop closer relationships with modem manufacturers, and significantly threaten Rockwell and 3Com in the retail space. Worse case scenario, Rockwell will decide to do a competing campaign, modem vendors will choose sides, and we will have another battle in the modem market that will further confuse consumers and dampen market growth. 3Com comes out the winner in this scenario, where joining forces ends up looking more like divide and conquer from 3Com's perspective. Shannon Pleasant, Industry Analyst, Networking Group